Bank bailouts have become a standard strategy for saving banking institutions that would otherwise fail and stop doing business.
Society has thus been forced to help an industry that is disliked by many because of arguments that failing to do so would create financial chaos and panic.
What is different about the most recent bailout of banks is the increased data and other information available due to technology that did not exist 30 years ago.
The growth of social media for communicating has also led to more sharing of observations about what banks did with the bailout money.
The traditional premise for saving banks through artificial government credit guarantees and financial support is that society needs banking institutions to survive for the greater good.
The basic assumption has been that even if banks are disliked, their survival is needed for society to grow and thrive.
After the disappointing results of the last two major bailout experiences, several questions such as the following have opened a new debate about the wisdom of governments and taxpayers saving banks from failing:
In 2008 the prevailing message was that the financial system and economy would crash quickly without emergency funding.
It is not unusual to hear that key agreements and even complete legislative bills are written by the banks being rescued.
With such inherent conflicts of interest, is it any surprise that the final outcome almost always favors banking interests rather than the taxpayers paying the bill? For example, in 2008 the primary reason for rushing a bill through Congress was to restore business financing.
Legislators were told that companies would stop operating in many cases without loans from banks.
But when the legislation was finalized, banks were not required in any way to resume their commercial loan activity.
Unsurprisingly very few banks have returned to what is considered a normal level of lending to small businesses.
What should be of even more concern is that many banks have resumed investing in the risky derivatives which precipitated the need for the last bailout.
How do you suppose he would feel about bank bailouts?
Society has thus been forced to help an industry that is disliked by many because of arguments that failing to do so would create financial chaos and panic.
What is different about the most recent bailout of banks is the increased data and other information available due to technology that did not exist 30 years ago.
The growth of social media for communicating has also led to more sharing of observations about what banks did with the bailout money.
The traditional premise for saving banks through artificial government credit guarantees and financial support is that society needs banking institutions to survive for the greater good.
The basic assumption has been that even if banks are disliked, their survival is needed for society to grow and thrive.
After the disappointing results of the last two major bailout experiences, several questions such as the following have opened a new debate about the wisdom of governments and taxpayers saving banks from failing:
- What are the benefits of saving banks with bailouts?
- Would we be worse off if banks were allowed to fail?
- Do banks have to pay back all funds used to bail them out?
In 2008 the prevailing message was that the financial system and economy would crash quickly without emergency funding.
It is not unusual to hear that key agreements and even complete legislative bills are written by the banks being rescued.
With such inherent conflicts of interest, is it any surprise that the final outcome almost always favors banking interests rather than the taxpayers paying the bill? For example, in 2008 the primary reason for rushing a bill through Congress was to restore business financing.
Legislators were told that companies would stop operating in many cases without loans from banks.
But when the legislation was finalized, banks were not required in any way to resume their commercial loan activity.
Unsurprisingly very few banks have returned to what is considered a normal level of lending to small businesses.
What should be of even more concern is that many banks have resumed investing in the risky derivatives which precipitated the need for the last bailout.
- "Banking establishments are more dangerous than standing armies.
"
How do you suppose he would feel about bank bailouts?
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